‘Right to work' sets workers free to freeload

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Once Michigan stood proud. In addition to GM, Ford and Chrysler, it was home base for the United Auto Workers, a powerful escalator transporting hundreds of thousands of blue-collar workers into America's middle class.

Even as the domestic auto industry rebounds from bankruptcy, restructuring and the Great Recession, many businesses and workers in the industrial Midwest continue downsizing. As recently as 2004, the UAW had 654,000 active members in the United States. Now membership struggles to stay at 380,000. That organized labor is weakened is not news. But when Michigan – the nation's fifth most-unionized state at 17.5 percent – last month passed two anti-union laws, people noticed.

The so-called right-to-work laws allow employees in union shops to opt out of paying union dues. These employer-friendly laws in effect in 22 states in the South and West, were joined by Indiana and Michigan in 2012. Republican Gov. Rick Snyder said he believed the legislation would lead to “more and better jobs for Michiganders.”

Right-to-work is a clever slogan and frames the issue in a most positive way for business leaders and their conservative supporters. The Reagan Revolution and the outsourcing tidal wave catapulted the United States into a strange new world – the free-agent, free-rider nation. If you are a superstar in your field, a Kobe Bryant or Chris Paul, not to worry; free-agency works great. But for mere mortals in the workplace, dedication and fine skills do not amount for much muscle when individuals negotiate for salary and benefits.

Unions are about the collective leverage, the power of numbers versus the power of capital. All businesses require capital, management and labor, and business executives, wanting to grow and maintain profitable enterprises, have a strong incentive to keep costs, including labor, as low as possible.

Labor unions, like business groups such as the Chamber of Commerce, are voluntary associations. They need members to join and pay dues to exist as viable organizations. During the heyday of the New Deal and the Wagner Act of 1935, unions operated “closed shops,” which meant workers had to be members of the union to get a job. If the closed shop still existed, the phrase “right to work” would have some accuracy.

But the Taft-Hartley Act of 1947 curbed the power of unions by outlawing the closed shop and changing the rules in ways that benefitted owners, not workers. Taft-Hartley allows for the “agency shop,” in which employees do not need to be union members as a condition of employment but must pay union dues to cover the cost of negotiating and administrating the contract. This was deemed reasonable because these non-union members would receive the paychecks and benefits negotiated by the union. However, Taft-Hartley also gives individual states the option of opting out of the agency shop and to instead follow the “open shop,” right-to-work, model.

Here, workers can avoid paying union dues, yet receive union-negotiated wages and benefits. Furthermore, when non-dues-paying employees file a complaint at work, the union is required to provide them with legal representation free of charge. A sweet deal, right? In economics, this is known as the free-rider problem – when people enjoy benefits without paying for them. Conservatives love to talk about freedom – the open shop is the freedom to freeload.

During a hearing preceding the 2012 Indiana vote on right to work, a representative from the Chamber of Commerce was asked if the chamber would allow businesses from around the state to use the services of the chamber while refusing to be dues-paying members. According to Gordon Lafer, a labor studies professor at the University of Oregon, the chamber representative replied, “Absolutely not. That would put us out of business and not be fair to our dues-paying members.”

And this is exactly why labor unions oppose the “open shop” laws. Everyone wants a free lunch, but the party does not last. Over time, as unions lose members and clout in “open shop” right-to-work states, wages stagnate and fall behind those of union states. And the effects are often felt across the private sector. In regions where unions are strong, they set a floor on wages and benefits that private employers must match in their search for skill and talent. The Economic Policy Institute reports that the average full-time, full-year worker in a right-to-work state makes approximately $1,500 less annually than a similar worker in a non-RTW state.

Thirty years ago, union membership in the private sector (once nearly 40 percent in post-War America) stood at 17 percent, now it is a miniscule 7 percent. When unions were strong, America had a robust and growing middle class and income inequality was relatively low. Today, union membership continues to decline, the middle class shrinks, many jobs are “benefit free,” and economic inequality is at its highest since the 1920s. In the aftermath of the Great Recession, the nation's largest corporations recorded record profits, yet unemployment remains high and wages flat.

Many blue-collar families struggling to pay rent would be happy to skip paying optional union dues. That is what the backers of right-to-work have in mind. It's a vicious game that has left too many Americans members of a group they would rather escape – the working poor.

Two things need to happen for unions to revive and the middle class to grow: Labor must reclaim the rhetoric of rights by speaking about union organizing as a civil right and by pushing for the Civil Rights Act to be amended to make it illegal to fire or otherwise discriminate against employees attempting to organize a union.

Just as important, the emerging drive to expand manufacturing in the United States, as exemplified by General Electric's new focus on manufacturing appliances domestically, must pick up steam. A resurgence of “Made in America” would do more than anything else to aid ailing workers, labor unions and the struggling middle class.

Kevin O'Leary is a journalist and political scientist at the Center for the Study of Democracy at UC Irvine.

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